What's a state reciprocal agreement?
A reciprocal agreement, also called reciprocity, is an agreement between two states that lets residents of one state request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.
For example, let's say you live in New Jersey and work in Pennsylvania—two states with a reciprocal agreement. You can ask your employer to stop withholding Pennsylvania taxes. If your employer stops withholding Pennsylvania taxes, you'll only have to file a New Jersey return.
The reverse would also be true. If you lived in Pennsylvania and worked in New Jersey, you can ask your employer to stop withholding New Jersey taxes. In this scenario, you would only have to file a Pennsylvania return due to the reciprocal agreement.
If your employer has withheld taxes for the work state instead of the resident state, you'll have to file for a refund from your work state. You'll still file your resident return that also includes that income and pay tax on it.
TurboTax handles reciprocal states and will generate the correct state(s) based on your personal information and your W-2.
You can see which states have reciprocal agreements and, if you live in one of those states, the exemption form you can file. If you file an exemption form to not have withholding from that state, be sure to ask your employer to withhold taxes from your resident state, otherwise you may get hit with underpayment penalties come tax time.
Which states have reciprocal agreements?
Below, you can see the state(s) that a particular state has a reciprocal tax agreement with.
As a worker in a reciprocal state, you can fill out that state's exemption form and give it to your employer if you don't want them to withhold taxes for your work state. If you do this, make sure your employer also withholds taxes for your resident state.
Arizona
If you're a resident of California, Indiana, Oregon, or Virginia, submit the WEC form.
District of Columbia
If you're a resident of Maryland or Virginia, submit the D-4A form.
Illinois
If you're a resident of Iowa, Kentucky, Michigan, or Wisconsin, submit the IL-W-5-NR form.
Indiana
If you're a resident of Kentucky, Michigan, Ohio, Pennsylvania, or Wisconsin, submit the WH-47 form.
Iowa
If you're a resident of Illinois, submit the 44-016 form.
Kentucky
If you're a resident of Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, or Wisconsin, submit the 42A809 form.
Maryland
If you're a resident of District of Columbia, Pennsylvania, Virginia, or West Virginia, submit the MW 507 form.
Michigan
If you're a resident of Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin, submit the MI-W4 form.
Minnesota
If you're a resident of Michigan or North Dakota, submit the MWR form.
Montana
If you're a resident of North Dakota, submit the MW-4 form.
New Jersey
If you're a resident of Pennsylvania, submit the NJ-165 form.
North Dakota
If you're a resident of Minnesota or Montana, submit the NDW-R form.
Ohio
If you're a resident of Indiana, Kentucky, Michigan, Pennsylvania, or West Virginia, submit the IT-4NR form.
Pennsylvania
If you're a resident of Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia, submit the REV-419 form.
Virginia
If you're a resident of District of Columbia, Kentucky, Maryland, Pennsylvania, or West Virginia, submit the VA-4 form.
West Virginia
If you're a resident of Kentucky, Maryland, Ohio, Pennsylvania, or Virginia, submit the WV/IT-104 NR form.
Wisconsin
If you're a resident of Illinois, Indiana, Kentucky, or Michigan, submit the W-220 form.
